For the last twenty-five years every citizen of California has taken comfort in the fact that under California law all citizens are entitled to an iron-clad guarantee that attorneys wielding the state’s coercive powers in criminal, eminent domain, and public nuisance cases on behalf of various public entities and agencies could not tempted to abuse their ethical obligation of neutrality by the prospect of a personal financial gain (or loss) in those cases. California’s judiciary has kept the public’s trust and ensured this comfort by requiring all attorneys exercising the state’s police powers in these types of cases be held to heightened ethical requirement of neutrality. It has maintained trust by overseeing of the bar’s integrity and scrupulously enforcing the administration of justice.
California’s obligation of neutrality was not based on employment status, technicalities, narrow holdings or case law from other jurisdictions. Nor is it merely reflective of yesterday’s ethics instead of today’s realities. Instead, it was based on the broad ethical belief that all attorneys representing the government are de facto “government attorneys” who must be impartial when exercising the sovereign’s considerable coercive powers; that they must always seek justice and that they must be fair to all3. This obligation is based on the fundamental, but obvious, finding that the neutrality which is so essential to our system of justice is violated whenever an attorney representing the government in litigation in which the state, as sovereign, is affirmatively exercising its police powers to prosecute people or companies has a personal financial interest in the outcome of that litigation.4 The ideal that all people (including attorneys) officially representing the government should be free of inappropriate financial conflicts of interest is not new. It was embraced by the people, enacted into law, and is imbedded in the California Government Code.5 It was extended to civil cases by the California Supreme Court in Clancy6 and it is part of the ABA Model Code of Professional Responsibility that every attorney should strive to meet.7
Because of this protective framework, all attorneys who affirmatively wield the state’s coercive police powers on the public’s behalf have an ethical duty of inflexible neutrality. Attorneys who have personal financial interests in the outcome of the litigation cannot, as a matter of law, be deemed “neutral” in their actions, decisions, or in their advice and counsel to public authorities. It was based upon these beliefs and findings that California’s Supreme Court unequivocally held twenty-five years ago that contingent fee contracts are “antithetical to the standard of neutrality that an attorney representing the government must meet when prosecuting a public nuisance abatement action.”8 Simply stated, the Supreme Court held that human nature cannot be trusted to be “neutral” when the public’s lawyer has a financial stake in the outcome. When the pursuit of public justice is tainted by the pursuit of personal gain, or even the appearance or possibility of such a taint is presented, our nation’s most precious political asset – the confidence of its people – is compromised. When that occurs, every citizen’s liberty is imperiled.
Recently, however, in County of Santa Clara v. Atlantic Richfield Co. (Santa Clara II), a California appellate court decided otherwise.9 Faced with the choice of two conflicting policy choices – either allowing cities and counties the right to finance and prosecute public nuisance abatement cases using private contingent fee counsel or the necessity of protecting the public’s trust and faith by denying them that right – the Santa Clara II court chose the former. Without framing a reliable system of ethical verification or accountability, the appellate court artfully created a “mere assistants” loophole though which it distinguished, and effectively eviscerated forever, Clancy’s unabashed obligation of neutrality for all lawyers representing the government in public nuisance actions.10 In doing so, the Santa Clara appellate court indulged a number of “legal fictions” that masked major changes in the State’s substantive law.
In particular, rather than honoring stare decisis, the Santa Clara appellate court created an illusion of verification by creating a boundless “control” corollary in which a governmental “apex” attorney can control the contingent fee counsel’s activities by supposedly taking ultimate responsibility for all decisions and ensuring ethical compliance.11 This supervisory layer relegates the contingent fee lawyers to an “assisting” role where, presumably, they can do no harm. It is unreasonable, however, to believe that the public entities retained their contingent fee counsel to be “mere assistants.” In reality, these contingent fee counsels are highly trained and influential lawyers who gather evidence, create strategy and prepare effective arguments to be used by their supervising attorney – all with the single goal of obtaining a favorable monetary outcome. Moreover, an “apex” attorney’s participation does not provide transparent verification, especially when all communications between the public entities, the supervising attorney and the assisting contingent fee counsel are shielded by the absolute bar of the attorney-client privilege, Under such an arrangement, it is impossible for anyone, other than perhaps the court itself, or its appointee, to monitor the public entities and their contingent fee counsel to ensure the litigation is being carried out in a fair, evenhanded and impartial manner that serves the public’s best interests. Even then, problems will not be prevented, but merely detected and, to some degree, redressed. Thus, this illusory corollary vitiates the absolute “neutrality” requirement in favor of, at best, ex post facto exposes’, questionable recompense to the parties, and disastrous loss of public confidence in the judicial system.
By crafting its corollary, the Santa Clara decision turns the Supreme Court’s honored precedent on its head. Instead of respecting the honored principle that absolute neutrality is essential, it concludes that the public entities’ right to hire contingent fee counsel is more important than ensuring the public’s trust in the judiciary – thereby undermining the cherished American rule that a government attorney’s paramount duty is not to win, but to seek justice. Plainly, the Santa Clara appellate court believes that, with “supervision,” this paramount goal can be fulfilled even when private contingent fee counsel provide their services in exchange for a significant percentage of the monetary recovery extracted from the defendants. But “control” by governmental “apex” attorneys does not solve the problem, especially when privileges preclude responsible oversight by the court and informed inquiries by opposing counsel. As the Clancy court so wisely noted, ethical requirements follow the job. They cannot be contracted away by hiring independent contractors and cannot be guaranteed by supervision and oversight. More than ever before, courts must not abandon traditional ethical guarantees and replace them with corollaries that merely promise justice in “extraordinary circumstances”—especially when those corollaries primarily arise from economic considerations, as opposed to historical jurisprudence.
One of the most important and well established12 legal principles governing our judiciary is the doctrine of stare decisis; sometimes referred to as the doctrine of precedent.13 In a decision explaining this doctrine, the California Supreme Court stated that:
[U]nder the doctrine of stare decisis, all tribunals exercising inferior jurisdiction are required to follow decisions of courts exercising superior jurisdiction. Otherwise, the doctrine of stare decisis makes no sense. The decisions of this court are binding upon and must be followed by all the state courts of California. Decisions of every division of the District Courts of Appeal are binding upon all the justice and municipal courts and upon all the superior courts of this state, and this is so whether or not the superior court is acting as a trial or appellate court. Courts exercising inferior jurisdiction must accept the law declared by courts of superior jurisdiction. It is not their function to attempt to overrule decisions of a higher court.14
Stare decisis is the “fundamental jurisdictional policy” that provides predictability in the law despite the current personnel on a particular court. It provides this predictability by conferring respect upon prior opinions of courts and holds that applicable precedent usually must be followed -- even though a case, if considered by today’s justices, might be decided differently.15 It is grounded in the policy that “certainty, predictability and stability in the law are the major objectives of the legal system; i.e., that parties should be able to regulate their conduct and enter into relationships with reasonable assurance of the governing rules of law.”16
The doctrine also allows courts the flexibility to modify, change or overturn precedent which is why a prior opinion “usually must be followed” instead of “always must be followed.” But that flexibility also has rules to govern it. With respect to Supreme Court precedent, only it is permitted “to reconsider, and ultimately to depart form,” its own prior precedents and then only “when subsequent developments indicate an earlier decision was unsound, or has become ripe for reconsideration.”17 As a result of the doctrine and its importance to jurisprudence, the California Supreme Court held that it has “always required a departure from precedent to be supported by some ‘special justification.’”18 Precedent must be followed by lower courts because the issue being judged has already decided by a higher court.
This obligation for courts to follow precedent begins with necessity. It is based on the premise that “no judicial system could do society’s work if it eyed each issue afresh in every case that raised it.”19 To put the importance of stare decisis in perspective, the United States Supreme Court described the judiciary’s respect for this doctrine of precedent as being, “by definition, indispensable” for the very concept of the rule of law.20 But it also recognized that “common wisdom dictates that the rule of stare decisis is not an ‘inexorable command’ ” and in “rare cases” a prior judicial ruling should be overruled.21 In deciding whether to overturn a prior holding, courts are to ask themselves whether:
- the prior ruling "has proved to be intolerable simply in defying practical workability;"
- the prior ruling "is subject to a kind of reliance that would lend a special hardship to the consequences of overruling and add inequity to the cost of repudiation;"
- "related principles of law have so far developed as to have left the old rule no more than a remnant of abandoned doctrine;" or
- "facts have so changed or come to be seen so differently, as to have robbed the old rule of significant application or justification."22
In summary, the doctrine of stare decisis, counsels that similar cases be decided the same way when their material facts are the same. To ensure this uniformity, stare decisis requires that lower courts within a given provincial jurisdiction yield to and follow as binding authority the decisions of higher courts within the same jurisdiction.
Although lower courts are bound in theory by precedent, they are sometimes uncomfortable with the decisions that precedents demand.23 When this situation arises, a judge might feel compelled to do more than simply apply the precedent’s law to the facts of the case – thereby forcing the aggrieved party to an appeal. In some cases, for example, the lower court judge may feel compelled to opine about the unfairness or injustice that will occur because she followed precedent. Alternatively, the judge may attempt to argue that an exception to the precedent should be made under the circumstances presented by the facts of the case. The judge may even ask the higher court to accept appellate review to consider her arguments.
Occasionally, however, when judges dislike or disagree with the decision demanded by precedent, they may creatively seek ways to circumvent it. To accomplish this feat, judges must somehow find a way to narrow the precedent’s breadth and scope. One technique is to simply claim that the precedent is limited to the specific facts of the underlying case. In this manner, if there are any factual differences between the two cases – and in the flux of life there are always differences in fact patterns – the judge can claim that the precedent is not applicable as direct authority but only as an analogy which can then be molded to obtain the desired outcome. For example, the judge may recite what she considers to be the material facts upon which the precedent is based, and then identify at least one missing or different material fact in the case under consideration. Alternatively, she may identify a unique, important and new material fact in the pending case that was not considered when the precedent was established. By incorporating new facts in the analysis and stressing dissimilarities, the judge may declare herself free from precedent. Although the California Supreme Court has admonished the state’s lower courts to abide by its precedents and to avoid modifying them, sometimes judges overstep their authority and improperly circumvent precedent. Such an excursion may have occurred recently in the case of County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292.24
The Precedent: People Ex. Rel. Clancy v. Superior Court
Twenty-five years ago in People ex rel. Clancy v. Superior Court25 the California Supreme Court declared that attorneys who prosecute public nuisance cases on behalf of public authorities must be neutral and free from financial interests in the recovery. The Clancy court stated that the duty of neutrality is born of two fundamental aspects of the attorney’s employment: “First, he is a representative of the sovereign; he must act with the impartiality required of those who govern. Second, he has the vast power of the government available to him; he must refrain from abusing that power by failing to act evenhandedly.”26 Moreover, for purposes of creating precedent, the Clancy court held that this requisite neutrality cannot be assured when public authorities engage private counsel under contingent fee agreements.27
According to Clancy, contingent fee contracts are "antithetical to the standard of neutrality that an attorney representing the government must meet when prosecuting a public nuisance abatement action."28 Such agreements compromise neutrality by impermissibly invading the unconditional duty of loyalty owed by a counsel who advocates the public's interest. The duty of loyalty requires the lawyer to have but one master, and when any attorney represents the government on behalf of the People, that singular master must be the People's goal of justice. As the Clancy court so wisely noted: "Our system relies for its validity on confidence of society; without a belief by the people that the system is just and impartial, the concept of the rule of law cannot survive."29 For this reason Clancy is the insulation that protects the general public from the corrosive personal financial interests inherent in contingent fee contracts.
1. Clancy's Breadth and Scope
While the duty of neutrality was already well established and understood in criminal cases, Clancy extended the duty to government attorneys prosecuting certain types of cases in civil actions and administrative proceedings.30 In barring the use of contingent fee agreements by public entities hiring outside counsel to bring public nuisance cases the Clancy court stated:
Public nuisance abatement actions share the public interest aspect of eminent domain and criminal cases, and often coincide with criminal prosecutions. These actions are brought in the name of the People by the district attorney or city attorney. (Code Civ. Proc., § 731.) A person who maintains or commits a public nuisance is guilty of a misdemeanor. (Pen. Code, § 372.) “A public or common nuisance ... is a species of catch-all criminal offense, consisting of an interference with the rights of the community at large .... As in the case of other crimes, the normal remedy is in the hands of the state.” (PROSSER & KEETON, THE LAW OF TORTS (5th ed. 1984) p. 618; see also Board of Supervisors v. Simpson, 36 Cal.2d 671, 672-675 (1951)). A suit to abate a public nuisance can trigger a criminal prosecution of the owner of the property. This connection between the civil and criminal aspects of public nuisance law further supports the need for a neutral prosecuting attorney.31
When the Clancy court wrote this opinion, it did not raise any doubts or ambiguities regarding the breadth or scope of its holding, nor did it provide for any flexible or “discretionary” exceptions or corollaries. It did not rule that the duty applies only in “special cases” or restrict its holding to the “unique facts” of the case.
When Clancy extended the obligation of neutrality to contingent fee attorneys, it did so broadly, simply stating that the obligation of neutrality “follows the job.”32 The court did not dissect Mr. Clancy’s job responsibilities, and it did not discuss whether Mr. Clancy was “subordinate” to anyone. It did not discuss the degree of oversight (or lack thereof) exercised by government officials (Mr. Clancy’s client), and it did not elaborate on the amount of authority vested in Mr. Clancy or retained by the government. The court also left no room for a “corollary” alternative when it reiterated that “[w]hen a government attorney has a personal interest in the litigation, the neutrality so essential to the [judicial] system is violated.”33
Likewise, the court did not differentiate between a government attorney who is an officer of a public entity and an independent contractor working for government attorneys and paid by a contingent fee agreement. In fact, the opposite is true. The Clancy court specifically stated that “a lawyer cannot escape the heightened ethical requirement of one who performs governmental functions merely by declaring he is not a government official.”34 The court plainly and succinctly held that all attorneys prosecuting a public nuisance case must adhere to strict neutrality if they are “performing tasks on behalf of and in the name of the government.”35 Thus, Clancy court took a job task or function-based approach to deciding which attorneys had to be absolutely neutral.
2. Clancy's Ethical Underpinnings
The foundations of Clancy’s requirement of conspicuous and antiseptic neutrality are not found in specific acts of unethical behavior by Mr. Clancy or other attorneys. They are found in the healthy mistrust of concentrated power that underlies the “checks and balances” and other safeguards citizens have enshrined in our democratic institutions. For guidance, the Clancy court looked to the ABA Code of Professional Responsibility.36 According to the Model Code, the proper perspective by which to judge the breadth and depth of Clancy’s duty of neutrality is not whether parties deeply involved in the system, such as public officials, public advocates, or even judges have concerns. The focus must be whether the arrangement “might lead” the layman to conclude that the appearance of impropriety exists.37 The emphasis is on perception of citizens, not that of litigants, their counsel or elected officials, because it is the citizen’s confidence that is at stake and it is the citizen’s resources which are at risk. From a lay person’s perspective, the Santa Clara appellate court control corollary creates an appearance of impropriety because it is based on employment status – a factor that can be easily manipulated. It also allows public authorities to prejudicially vary the obligation it owes to the public simply by choosing to retain private counsel whose personal financial interests are inherently in conflict with the goal of justice. The public’s trust in the integrity of our judicial system needs and deserves assurances that all attorneys representing the government are required to treat all members of the public equally.
The combination of a huge fee (or nothing at all) undeniably creates a powerful incentive for contingent fee attorneys “wielding the power of government” to make decisions based on their best interest, instead of what is in the best interest of “justice.” The tensions, temptations and risks foreseen in Clancy are magnified exponentially in the Santa Clara case because of the number of large California communities involved.38 Therefore, the necessity of guaranteed neutrality is even more critical to secure the public interest. The “appearance of impropriety,” especially from the public’s perspective is inevitable.39 One need not be a legal professional to see the potential for abuse – and citizens, the all-important “laymen” protected by Clancy, are entitled to nothing less than absolute assurance that their trust will not be violated.
To ensure that the public trust is not compromised, Clancy emphasized the responsibility of government lawyers “to seek justice and to develop a full and fair record,” and stated that they “should not use [their] position or the economic power of the government to harass parties or to bring about unjust settlements or results.”40 The Clancy court felt so strongly that attorneys representing the public have to be neutral that it stated:
Not only is a government lawyer’s neutrality essential to a fair outcome for the litigants in the case in which he is involved, it is essential to the proper function of the judicial process as a whole. Our system relies for its validity on the confidence of society; without a belief by the people that the system is just and impartial, the concept of the rule of law cannot survive.41
The court wisely recognized that personal financial interests distort the “neutral” attitude essential to advocating and preserving the public interest. There are times when justice may be served by decisions that reduce or eliminate monetary compensation, and such occasions create inescapable conundrums. As Professor David Dana explains, “[s]ometimes public interest considerations dictate dropping litigation altogether or focusing on non-monetary relief. But contingency fee lawyers, perhaps unlike most government lawyers or even most outside hourly fee lawyers, arguably can be expected to pursue the maximum monetary relief for the state without adequately considering whether that relief advances the public interest and/or whether the public interest would be better served by foregoing monetary claims or some fraction of them, in return for non-monetary concessions.”42
As the Clancy decision recognizes, the neutrality requirement is not unique to California. The idea is so basic that it was embraced by the ABA which incorporated it into its 1983 Model Code of Professional Responsibility. The Clancy court approvingly cited the ABA’s Code when it stated that: “[a] lawyer who is a public officer, whether full or part-time, should not engage in activities in which his personal or professional interests are or foreseeably may be in conflict with his official duties.”43 As a result, “an attorney holding public office should avoid all conduct which might lead the layman to conclude that the attorney is utilizing his public position to further his professional success or personal interests.”44
County of Santa Clara v. Atlantic Richfield Co.
In the Santa Clara case,45 a group of public entities brought a lawsuit against companies that lawfully made and sold lead pigments long ago claiming that these companies knew that their product was toxic while telling the public it was safe. Although lead paint has not been sold since it was banned in 1978,46 it still remains in older homes and buildings. The governmental public entity plaintiffs (ten California cities and counties47) claim that they have been injured because they have to pay to educate the public and abate lead from these homes and buildings when the lead has been found to harm someone.48 In their lawsuit, they alleged causes of action for public nuisance, strict products liability, negligence, and unfair business practices and asked the court for both money damages and an injunction to require the defendants to abate lead from all the homes and building in their communities.49 From the beginning, the public entities hired private attorneys to prosecute the case for them pursuant to written agreements that makes payment of any fees and costs contingent on plaintiffs’ monetary recovery in the action because they claimed “to lack the resources and specific expertise necessary to prosecute this action” themselves.50
After the defendants filed a series of motions to dismiss, the trial court dismissed all of the public entities’ claims holding that the statute of limitations barred the causes of action as a matter of law because it began to run when the paint was applied.51 The Santa Clara appellate court disagreed and ordered the reinstatement or the public nuisance, negligence, strict liability and fraud causes of action.52 Shortly thereafter, the plaintiffs informed the trial court of their decision to limit this action to a single public nuisance cause of action and “sought only abatement.”53 This decision prompted the defendants to file a motion to bar the plaintiffs from retaining outside counsel on a contingent fee basis based on the principles articulated in People ex rel. Clancy v. Superior Court.54
1. The Trial Court Grants Defendant's Motion to Bar Contingent Fees
After noting that the case had become solely a public nuisance case and citing language from Clancy that “the contingent fee arrangement between the City and Clancy is antithetical to the standard of neutrality that an attorney representing the government must meet when prosecuting a public nuisance abatement action,” the trial court held that Clancy was applicable to the Santa Clara case.55 The trial court was not persuaded by the public entities argument that they were free to enter into contingent fee agreement as long as “the government attorneys continue to retain and/or exercise decision-making authority and control over the litigation in this case.”56 It noted that the contingent fee lawyers were co-counsel who were “performing work as attorneys for the plaintiff government entities” and that
as a practical matter as a practical matter, it would be difficult to determine (a) how much control the government attorneys must exercise in order for a contingent fee arrangement with outside counsel be permissible, (b) what types of decisions the government attorneys must retain control over, e.g., settlement or major strategy decisions, or also day-to-day decisions involving discovery and so forth, and (c) whether the government attorneys have been exercising such control throughout the litigation or whether they have passively or blindly accepted recommendations, decisions, or actions by outside counsel.57
Moreover, the trial court held that “[o]versight by the government attorneys does not eliminate the need for or requirement that outside counsel adhere to the standard of neutrality.”58 The trial court noted that that ethics cannot be selectively imposed. They must apply to everyone – or else they are meaningless.59 Accordingly, the trial court ruled that the public entities could not retain “outside counsel under any agreement in which the payment of fees and costs is contingent on the outcome of the litigation.”60
2. The Appellate Court Vacates the Order by limiting Clancy and Creating a Control Corollary
Following the trial court's ruling, the public entities successfully sought a writ of mandate from the Santa Clara appellate court to compel the trial court to vacate its order.61 The Santa Clara appellate court began its decision by reviewing the Clancy decision and it applicability to public nuisance lawsuits brought by public entities.62 Although it court acknowledged that it was bound to follow the precedent the Supreme Court set in Clancy,63 that allegiance had a very short reach as is seen in its very next sentence where it declared that it was not bound by what it decided to label as “dicta” and two paragraphs later when it held that Clancy was limited to the facts of the case.64 Moreover, the appellate court held that although “Clancy contains language suggesting that it is establishing a broad rule banning contingent fee agreements with private counsel in public nuisance abatement actions, we are bound by only the holding in Clancy, not all of its language.”65
The appellate court then liberated itself from Clancy by creating two important findings of fact about the old case: “James Clancy was serving as Corona’s sole representative in its public nuisance abatement action and had complete control over the litigation.”66 Neither of these facts is found in the Supreme Court’s opinion and neither was pertinent to its decision. The facts that the Supreme Court does recite in Clancy include the following:
- the City of Corona ("City") adopted ordinances regulating adult bookstores and the city manager informed the owner she would have to move her business;
- the owner challenged the constitutionality of the City's ordinances and obtained a federal court injunction against their enforcement;
- frustrated by the federal courts, the City retained Mr. Clancy on the same day it proposed a new ordinance declaring the sale of obscene publications to be a public nuisance;
- after the new public nuisance ordinance was passed, the City's police department investigated the adult bookstore
- the City then adopted a resolution declaring the bookstore a public nuisance;
- after Mr. Clancy filed a lawsuit on behalf of the city. "[p]olice officers were sent to the Book Store to photograph the magazines on sale and the movies available for showing;" and
- the City then served a subpoena demanding the production of documents "that the police had photographed."67
While Mr. Clancy may have been the only attorney listed on the pleadings, given the active involvement of the City’s officials and Police Department in developing the case, he clearly was not the City’s sole representative in the litigation. Given the pervasive role the police and City officials had in declaring the book store to be a public nuisance and gathering evidence against the book store, it is also just as plausible that Mr. Clancy did not have “complete control” over the litigation, but was engaged only to play a limited and subordinate role in the case. Nonetheless, the Santa Clara appellate court concluded that Mr. Clancy was the City’s sole representative and had complete control over the public nuisance abatement action. It is upon these two facts that the appellate court distinguished the facts in Clancy from the facts in the Santa Clara case.
After liberating its creativity from the constraining orbit of judicial precedent68 the Santa Clara appellate court wove a web of legal fictions69 to create its control corollary based on the belief and/or assumption that the highly skilled, talented and influential contingent fee lawyers hired because the public entities admittedly have neither the financial resources nor legal expertise to prosecute this case themselves70 are merely assisting the public entities.71 It held that Clancy’s requirement applies only to the governmental “apex” attorney responsible for prosecuting the case.72 But, Clancy was not about the responsibilities and duties of a single attorney. Instead, the Clancy court set policies and priorities about how the judiciary viewed and interpreted the responsibility of all attorneys representing the government; not only in public nuisance cases, but in cases in which the sovereign affirmatively exercises its police powers.73
3. The Questions the Appellate Court Should Have Asked - And What the California Supreme Court Should be Asking
Once the Santa Clara appellate court found that Clancy was applicable,74 it should have applied Clancy, as written, to the facts of the case. It is worth repeating that if the appellate court disliked or disagreed with the decision following the precedent demanded, it still should have affirmed the trial court’s order even if it did so grudgingly. Afterwards, it could have opined about the unfairness or injustice following precedent does to the public entities and suggested that a corollary to the precedent should be made under the circumstances presented by the facts of the case. The Santa Clara appellate court could also have opined that the Supreme Court should modify the precedent by creating the control corollary and laid out the facts and legal rationale for its creation. Finally, the appellate court could have asked the Supreme Court to accept appellate review to consider its arguments.75
Instead, the appellate court systematically deconstructed the Clancy decision, inferred new “findings of fact” to the Clancy decision, and declared guiding legal principles to be non-binding “dicta.” It then reconstructed Clancy in manner that allowed it to avoid stare decisis by creating a “control” corollary – a corollary that limits Clancy’s reach and exempts all attorneys representing the government from Clancy’s neutrality requirement except the governmental “apex” attorney.76
The Santa Clara appellate court’s decision is especially troubling in view of the many years that Clancy has reigned over relationships between public authorities and contingent fee counsel. It should be remembered that if the public entities (or anyone else) disagreed with Clancy’s holding, they had over twenty years in which to have it legislatively overturned or to legislatively create a control corollary for public entities.77 The silence of the public and from the legislature belies the need for any judicially-created “control” corollary. The compromising problems associated with governmental use of contingent fee agreement arrangements have been amply demonstrated and documented in many other states over the past decade.78
Despite this evidence, the California legislature, presumably relying on Clancy’s absolute prohibitions, did not pass laws authorizing “supervised” or “controlled” contingency arrangements. Indeed, at the time the fee agreements in Santa Clara were signed, no California statute, regulation or judicial decision authorized them. Instead, they stood flatly condemned by Clancy’s explicit language. To argue that the “control” corollary has always existed – indeed that it was implicit in Clancy’s unguided prohibitions – is surprising when nothing in the case itself or any development since its rendition explicitly supports such a contention. It therefore appears that the desire to use contingent fee counsel and the fiscal convenience of the relationship were the primary motivations for the agreement – nonjudicial factors that are decidedly irrelevant to Clancy’s uncompromising duty of neutrality.
Rather than indulging these policy interests, the Santa Clara appellate court should have pursued the reasoning mandated when a lower court is confronted with a precedent. The court should have asked – and indeed the California Supreme Court should ask on review – whether Clancy’s plain requirement of neutrality in public nuisance cases “has proved to be intolerable simply in defying practical workability;” whether its “limitation on state power [can] be removed without serious inequity to those who have relied upon it or significant damage to the stability of the society governed by the rule;” “whether the law’s growth in the intervening years has left [Clancy’s neutrality requirement] a doctrinal anachronism discounted by society;” and “whether [Clancy’s] premises of fact have so far changed in the ensuing decades as to render its central holding somehow irrelevant or unjustifiable in dealing with the issue it addressed.”79
As distinguished from “policy” considerations, these inquiries can be framed and determined by an objective record, as opposed to more subjective policies based upon conveniences and preferences. When these objective inquiries are pursued, it becomes clear that Clancy’s rule is neither unworkable nor an anachronism. Significantly, in the precedent’s twenty-plus years of existence, not one instance of abuse by contingent fee counsel and public authorities has been reported in California, a record unmatched by many states where such arrangements have been permitted. Indeed, to the extent the law has “grown” in this area, it has resulted in laws that severely restrict to use of contingency counsel by public authorities, clearly converging towards Clancy’s path.80 Finally, there is a great deal of evidence that, without Clancy’s clarity, both the public confidence and its purse will be vulnerable to abuse – a vulnerability that will not exist if Clancy is retained. Hence, the objective record, which always informs the common law, supports a conclusion that altering Clancy is neither necessary nor wise.
To the extent that the democratic voice of the people, residing in its legislature, disagrees, that change must be made by elected representatives in those houses, which are suitable places for considerations of policy and convenience. Courts, on the other hand, should depart from precedents only if they prove unsound through objective experience. Nothing in any judicial record created to date supports a departure from Clancy’s salutary rule. Only by indulging in “legal fictions” could such a result be obtained.
The Use of Legal Fictions
A legal fiction is a “device which attempts to conceal the fact that a judicial decision is not in harmony with existing law. The only purpose and use, upon last analysis, of any legal fiction is to nominally conceal this fact that the law has undergone a change at the hands of the judges.”81 It encompasses any judicial “assumption that conceals, or effects to conceal, the fact that a rule of law has undergone alteration, its letter remaining unchanged, its operation being modified.” It is “a rule of law which assumes as true, and will not allow to be disproved, something that is false, but not impossible.”82 It is a device used to attain a desired legal consequence or to avoid an undesired consequence.83
In the end, the fact is that the law is wholly changed, while the fiction is that the law has remained the same.84 Legal fictions carry with them a heavy price. Their use impairs reverence for truth and diminishes the public’s respect for the court. Even when judges create legal fictions to promote their view of justice, innovation-by-stealth proves nothing more than a willingness to sacrifice truth for form.85 “If the fiction is not based on truth, its use is unjustifiable” and “its continued use can result only in evil.” “If it is founded on truth, its use is foolish.”86
1. The Legal Fiction that Clancy is About Control
a. The Clancy Court was Concerned About the Nature of the Litigation
It is not surprising that attorneys seeking to evade Clancy’s prohibitions argue that the essence of the Supreme Court’s concern was not the contingent fee agreement but the “complete control” Mr. Clancy allegedly possessed over the case.87 This argument has many advantages for governmental officials who want to use contingent fee counsel. First and foremost, it presumes (as a general principle of law) that the governmental use of contingent fee agreements is ethical – except where the California Supreme court has said otherwise – and that any problems with its use are purely structural.88 If this argument is accepted, parties opposing the use of contingent fee contracts by public authorities face an insurmountable obstacle. In such circumstances, the government has unlimited opportunities to contractually reserve “control,” but the defendants are barred from verifying its efficacy by the attorney-client and attorney work-product privileges.
The underlying “fiction” of the “control” corollary is revealed, however, by an analysis of what the Clancy court said about the degree of “control” Mr. Clancy exerted over the litigation. In fact, it said absolutely nothing. Indeed, the court does not even mention the word “control” — not even once.89 The Clancy court does not focus on the presumed fact that Mr. Clancy exercised “sole discretion” over the litigation, and it never uses the phase “sole discretion.” Indeed, the court only discusses Mr. Clancy’s discretion in a footnote where it observes that while he “may have had little discretion in the decision whether to bring an action under the public nuisance ordinance” he may have had opportunities to impermissibly use discretion after the case was filed.90
Instead of “control,” the Clancy court focused on the nature of the litigation and held that government-sponsored public nuisance abatement cases were one of a class of cases in which the attorney(s) representing the government had to be neutral.91 By concentrating on the type of case in which contingent fee counsel is used, Clancy broadly declared that any arrangement that fell short of unconditional neutrality was absolutely forbidden in public nuisance cases. In such cases, the public’s confidence can only be protected by precluding contingent fee agreements – merely policing them does not adequately ensure public trust. If “control” is truly sufficient to protect the public interest in public nuisance cases, the Clancy’s court would surely have recognized and explicitly provided the corollary on its own – and the California courts would not have waited for twenty years to somehow “detect” it from Clancy’s plain language.
Government entities file a wide spectrum of cases, and Clancy plainly does not bar contingent fee agreements in all of them. Different classes of cases allow government attorneys to exercise differing amounts of police powers and place differing requirements on attorneys to “delicately” weigh and balance public and private values.92 Accordingly, based on the amount of police powers being exercised and the delicacy associated with weighing and balancing public and private values, some classes of cases require the government attorneys to “act impartially,” to refrain from abusing the government’s powers, to “act evenhandedly,” to “seek justice” and “to build a full and fair record.”93 Conversely, other classes of cases do not do not require the attorney representing the government to exercise the state’s police powers and do not require “the delicate weighing of values” described in Clancy.94 Depending on where a specific case lies on this spectrum, it may – or may not – invoke Clancy’s neutrality requirement.
In Clancy, the California Supreme Court listed three classes of cases that require absolute prosecutorial neutrality – criminal cases, eminent domain cases, and public nuisance abatement cases.95 In these cases contingent fee agreements give attorneys representing the government an “interest in the case extraneous to their official function” that creates an intolerable and incurable bias that is the antithesis of the neutrality required of those attorneys.96 The Clancy’s court’s admonition of neutrality in these classes of cases was total and unyielding. As the court stated:
Nothing we say herein should be construed as preventing the government, under appropriate circumstances, from engaging private counsel. Certainly there are cases in which a government may hire an attorney on a contingent fee to try a civil case. (See, e.g., Denio v. City of Huntington Beach, 22 Cal.2d 580 (1943) [contingent fee arrangement whereby the city hired a law firm to represent it in all matters relating to the protection of its oil rights].) But just as certainly there is a class of civil actions that demands the representative of the government to be absolutely neutral. This requirement precludes the use in such cases of a contingent fee arrangement.97
Indeed, the court specifically allows attorneys representing the government to be hired using contingent fee agreements in one class of cases – royalty collection cases. Such cases do not involve the exercise of the state’s police powers and there is little to no “delicate weighing” of values.98 Plainly, the public interest is not significantly impacted when pubic authorities use contingency counsel to pursue debt collection cases. At the other extreme, however, public confidence is plainly endangered when contingent fee attorneys are retained as criminal prosecutors. Public nuisance cases, which have been considered “quasi-criminal” throughout their centuries of history,99 are only slightly removed from criminal prosecutions, and are naturally subject to Clancy’s absolute restrictions. Thus, given the nature and history of the tort of public nuisance, it was entirely reasonable for the Clancy court to focus solely on the degree of prosecutorial discretion involved in “balancing public and private values” in such cases. The primacy of this reasoning, which elevated public confidence risks to the highest level, required an absolute prohibition. No lesser rule, such as a “control” corollary would suffice.
Although Clancy does not bar the use of contingency agreements in all civil cases, neither does it justify the creation of a corollary that permits the hiring of contingent fee “co-counsel” in classes of cases where Clancy otherwise applies. Another recent decision involving debt collection – Priceline.com Inc. v. City of Anaheim100 – seeks to do just that by also improperly focuses on an attorney’s designated role, as opposed to the cause of action. Its reasoning creates an artificial “wall” between civil and criminal cases and ignores Clancy’s comparisons of public nuisance and eminent domain cases to criminal cases.101 The court justified the wall (and thus “distinguished” Clancy on the facts) by an assumption that “[t]he government lawyers [will] check the contingency fee lawyer’s financial interests.”102 It tries to ground its legal fiction in precedent by claiming that a Clancy footnote supports its “control” corollary. In that footnote the Clancy court dismissed Mr. Clancy’s reliance on an Indiana criminal obscenity case in which the court allowed an outside lawyer to aid the prosecutor by noting that the lawyer was hired not as a special prosecutor but as co-counsel.103 Seizing on this distinction, the Priceline court argues that the Clancy court could have easily distinguished the Indiana decision based upon the lack of a contingency arrangement – but did not.104
The court’s reliance on this footnote as a basis to create new law is misplaced. At best the Indiana case merely addresses the general propriety of using private counsel to “assist” government prosecutors. If, however, the Priceline court is correct that government lawyers are an adequate “check” on contingency fee lawyer’s financial interests and that the Clancy court’s only objection to governmental use of contingent fee attorneys was “control,” then logically one also has to also believe that with adequate “control” the California Supreme Court would be amenable to allowing criminal prosecutors to use contingent fee agreements to hire co-counsel in criminal cases – a position that Clancy plainly states is unethical and forbidden.106
As the Clancy court so aptly stated: “Any financial arrangement that would tempt the government attorney to tip the scale cannot be tolerated” in those classes of cases that require absolute neutrality.107 Clearly, no California court would entertain the idea of letting governmental entities contractually hire contingent fee counsel to prosecute or even help prosecute criminal cases – felonies or misdemeanors. In criminal cases, it does not matter how much “control” the government contractually retains or how well the contingent fee attorney is “supervised.” Under such circumstances, arguments that government lawyers will “check” the contingency fee lawyer’s financial interests are plainly unacceptable. But this is precisely the argument that must be accepted if Clancy’s neutrality requirement is about the role of the attorney and not the nature of the case. Clancy, however, counsels the judiciary to consider the nature of the case using a “sliding scale” or “continuum” to determine the need for neutrality and whether the use of contingency fee agreements will imperil public confidence. The “control” and “co-counsel” corollaries require a completely different analysis focusing on contractual language. If accepted, the “control” and “co-counsel” corollaries necessarily preclude the continued efficacy of the Clancy analysis in all cases. Given this perspective, these corollaries actually vitiate Clancy’s prohibitions and replace them with newer, permissive standards.
2. Legal Fictions of the "Apex" Attorney
a. Clancy's Neutrality Obligation Applies to All Attorneys Representing the Government
It is axiomatic that lawyers, by the very nature of their work, influence litigation. The work product and efforts of effective lawyers are anything but minor, insignificant, unimportant, trifling, small or unworthy of concern.108 The Clancy court recognized this basic reality when it held that personal financial incentives and risks inherent in contingent fee contacts create “an interest extraneous to his official function” that violates the attorney’s obligation of neutrality.109 Given these truths, Clancy held that the obligation of neutrality extended beyond in-house government attorneys to any attorney representing the government in public nuisance cases.110
With this holding, Clancy embraced another axiom, namely, that ethics cannot be selectively imposed. They must apply to everyone – or else they are meaningless. Following the precedent set forth in Clancy, the trial court in Santa Clara ruled that that governmental oversight “does not eliminate the need for or requirement that outside counsel adhere to a standard of neutrality” because as a practical matter it is impossible to determine the extent that the non-neutral attorneys influence the prosecution of the case.111 Thus, as long as an attorney represents the government in a public nuisance case and is “performing tasks on behalf of and in the name of the government” then that attorney has an obligation to be neutral.112
When the court of appeals in Santa Clara limited Clancy’s neutrality obligation to governmental “apex” attorneys, the court did not critically examine the contingent fee attorneys’ actual role in the litigation. Instead, it relied upon – and did not look beyond – the language in the contingent fee agreements and affidavits swearing that the governmental attorney would control the litigation. With nothing more than this contractual and promissory evidence, the Santa Clara appellate court held that it was “undisputed” that the public entities’ contingent fee counsels “play a limited subordinate role in this litigation.”113 The court reached further to state that when contingent fee attorneys are supervised by governmental “apex” attorneys, they are not in a position to influence the balancing of interests of the case or to influence any other important litigation decisions.114
b. The Legal Fiction of the "Apex" Attorney
The Clancy court unequivocally prohibited the use of contingent fee agreements in government sponsored public nuisance abatement litigation because it was concerned about the extraneous interest caused by the agreement.115 If these concerns could have been contractually solved through oversight and control, surely the court would have said so – or at least discussed Mr. Clancy’s contract and its failure to provide adequate supervision.116 But that is not what the Clancy court did. Instead, it broadly stated that attorneys representing the government are subject “to the heightened ethical requirements of one who performs governmental functions” when they are helping the state exercise its police powers.117 It is a legal fiction to claim that the “extraneous interests” caused by the contingent fee agreements, which as a matter of law violate Clancy’s obligation of neutrality,118 can be cured and rendered harmless simply by contractually declaring or otherwise attesting that a government “apex” attorney retains final authority and approval, and that contingent fee counsel are merely assisting the client.
The Clancy court’s paramount concern in this public nuisance was ensuring prosecutorial neutrality.119 Prosecutorial neutrality means many things, but legal commentators, scholars and the Clancy court agree that it necessarily includes fairness, independence, objectivity and the absence of an extraneous interest in the case.120 Because prosecutorial discretion, and hence the need for prosecutorial neutrality, pervades every aspect of the litigation, including the investigation and case development, neutrality can only be ensured and maintained if every attorney representing the government is neutral.121 As a result, prosecutorial neutrality cannot be confined to, or within, the discretion of a single “apex” attorney and the consequence of her decisions. Instead, the neutrality of the entire prosecutorial team must be guaranteed. Promises, no matter how solemnly made, do not provide that assurance, and accountability for breaching them comes too late to avoid serious harm.
The main reason the judiciary prohibited prosecuting attorneys, including those prosecuting public nuisance cases, from having personal interests – including financial interests – is the likelihood that bias may deflect the prosecutor's focus from the public interest.122 Based on this very concern, in People v. Eubanks, the California Supreme court ordered the recusal of a prosecutor because the crime victim paid significant expenses already incurred by the prosecutor in connection with the criminal investigation.123 The court found the victim’s financial assistance was potentially “of [such] a nature and magnitude” that it was “likely to put the prosecutor's discretionary decision-making within the influence or control of an interested party,” such that it should be deemed to be a “disabling conflict” requiring the prosecutor’s recusal.124 While the Eubanks court clearly states that a “district attorney is not disqualified [from a case] simply because, in an effort to overcome budgetary restraints, he or she has accepted assistance from the public in investigating or prosecuting a crime,”125 it should be obvious to all that governmental receipt of private financial assistance is far less corrosive of the public trust than the government contractually giving attorneys a personal financial stake in the litigation’s outcome. This reality is not lost the California Supreme Court which observed that if a Eubanks’-type of private financial assistance creates a “disabling conflict” then “[a] direct financial benefit as a result of the outcome of a proceeding is even more offensive.”126
This legal fiction of the “apex attorney” can be particularly dangerous because it allows authorities unbridled discretion to vary the ethical duties owed by lawyers to the public. Merely having the choice whether to handle the case using in-house counsel or by hiring private contingent fee counsel to assist in prosecuting the case on its behalf inserts prejudicial bias. In cases where the government chooses to handle the case entirely with government lawyers, the public is prophylactically protected because neutrality is guaranteed. But when the government chooses to use an “apex” government lawyer, supplemented by private contingent fee counsel, the public must rely on promises, assurances, and ex post facto accountability.127 There is no rational basis for “lowering the bar” for private contingent fee counsel, especially when the exercise merely makes otherwise applicable ethical responsibilities easier to hurdle – at the public’s potential expense. The “appearance of impropriety” created by the appellate court’s control corollary – even if actual misconduct by private contingent fee counsel does not occur – is the lynchpin of the analysis. The public is entitled to know that the agreements that secure their representation will not even tempt their counsel to stray and the public entities choice of counsel must yield to the public trust in the integrity of the judicial system.128
3. The Legal Fiction of the Contingent Fee Attorney Who "Merely Assists" A Supervising Public Counsel
a. Can Contingent Fee Attorneys Who Finance Major Litigation and Who Participate as Litigation Experts Be Fairly Characterized as Marginal Assistants?
When the Clancy court extended the neutrality obligation to all lawyers “performing tasks on behalf of and in the name of the government,” it did not analyze the level of Mr. Clancy’s control or authority. By its silence on those issues, and by focusing its attention solely on the nature of the case, the Court created, at least in public nuisance cases, an absolute obligation of neutrality, leaving nothing open to interpretation, distinction or discussion. According to the appellate court in Santa Clara, however, Clancy’s obligation of neutrality does not extend to “private counsel, who are merely assisting in-house counsel and lack any control over the ligation” for two reasons.129 First and foremost, because “[i]t is undisputed that private counsel have been engaged to play a limited, subordinate role in this litigation. Second, because the public entities are represented by in-house counsel.130
While this holding is derived from multiple legal fictions131 it is based primarily on the untenable premise that the contingent fee attorneys hired by the public entities are merely “assisting” a public lawyer who is firmly directing, controlling and participating in the litigation – they are like potted plants that will not impact the course of this litigation. It was obvious to the Clancy court132 -- and should be obvious to anyone familiar with the egos and capabilities of effective trial lawyers of the stature involved in Santa Clara – that these lawyers are not mere “assistants” or “consultants.” Some have an extensive prior experience in government-sponsored public nuisance litigation, most notably with the State of Rhode Island and counties in New Jersey, where they were the public’s principal voice in the court in all phases of the litigation, including arguments to the highest tribunals.133 The history of the Santa Clara litigation has followed a similar course.134
Significantly, the Santa Clara trial court found and the public entities subsequently admitted that they hired these contingent fee counsel, not because they were seeking “mere assistance” in the pursuit of this public nuisance litigation, but rather because they wanted or needed their financial resources and the “specialized skills [and expertise] needed for [public nuisance] litigation” that they believed they lacked.135 Contingent fee counsel were therefore hired to provide leadership and expertise, not mere consultation and support. Once engaged, such qualities are not lightly ignored or sidelined, especially when the public authorities admittedly lack the expertise to challenge and reasonably question the counsel they have hired. Plainly, no rational person agrees to pay “mere assistants” a 17% contingent fee potentially worth hundreds of millions of dollars.136
Unfortunately, instead of analyzing the contingent fee counsel’s actual role to independently determine whether it violates Clancy, the Santa Clara court held that it was “inappropriate” to look behind the contractual language to ascertain the precise nature of the relationship because the parties did not factually dispute the nature of the contractual relationship.137 This judicial “two-step,” which allowed the court to avoid reality, is a hallmark of legal fictions.138 Here, the legal fiction suggests that the contractual language, standing alone, can “legally” transform highly qualified contingent fee lawyers who are personally financing the litigation from active participants with an impermissible extraneous financial interest into “marginal assistants” incapable of affecting the neutrality of the case’s prosecution.
b. Are Contingent Fee Counsel Truly "Representing" the Government if Public Authorities Retain Final Authority Over the Litigation
The Clancy court stated that the duty of neutrality is born of two fundamental aspects of the attorney’s employment: “First, he is a representative of the sovereign; he must act with the impartiality required of those who govern. Second, he has the vast power of the government available to him; he must refrain from abusing that power by failing to act evenhandedly.”139 Clancy further emphasized the responsibility of government lawyers “to seek justice and to develop a full and fair record,” and that they “should not use [their] position or the economic power of the government to harass parties or to bring about unjust settlements or results.”140 The Clancy court felt so strongly that attorneys representing the government have to be neutral that it stated that the concept of the rule of law cannot survive” without the people’s belief that our system of justice is just and impartial.141 It states that the duty of neutrality “follows the job: if [an attorney] is performing tasks on behalf of and in the name of the government to which greater standards of neutrality apply, he must adhere to those standards.”142
The Santa Clara appellate court however, distinguished away Clancy’s “task-based” approach in favor of an attorneys “employment status.” Without relying on any supporting principles stated in Clancy, the court created a “corollary” – based on a legal fiction – that Clancy’s obligation of absolute neutrality only extends beyond in-house government counsel if the contingency fee counsel “supplants” in-house counsel by having complete control over all aspects of the litigation and is responsible for “balancing the interests” of society.143
As discussed above, the Clancy court was concerned about much more than just “balancing the interest.” It was also concerned that government attorneys act evenhandedly in litigation, that they develop a full and fair record and that a fair outcome is achieved for the litigants.144 Viewed in this context, impartiality does not mean “indifference” – but rather requires an interest that transcends the outcome of a particular controversy. While prosecuting attorneys do “not share in the neutrality expected of the judge and jury” they are “expected to exercise [their] discretionary functions in the interests of the People at large,” and must not be “under the influence or control of an interested individual.”145
While it may be possible (but not plausible) that the government “apex” attorneys will not be impermissibly “influenced” as they balance the public’s interest, the same cannot be true for private contingent fee counsel. Every attorney working on litigation, by the nature of their work, choices, demeanor, findings, advice and counsel, has an influence and effect on the development of the record, the fairness of the litigation and the balancing of interests required in public nuisance litigation. The intensity of the effort and the temptations to advocate issues that serve personal interests, as opposed to the public welfare, are magnified exponentially when the controversy involves not only gigantic recoveries, but also extraordinary fees. Most importantly, concerns regarding the potential for self-serving behavior are significantly raised when the participating counsel’s complete compensation depends upon victory, as opposed to altruistic public service. Clearly, no one person – not even the most trusted “apex” counsel – can eliminate these concerns,146 and if they cannot be eliminated, their risk should not be tolerated.
Clancy is Not the Only Precedent Being Modified
Clancy is not the only casualty of the Santa Clara appellate court’s decision. Indeed, the ruling undermines basic principles underlying the priorities of California courts in other ethical situations, such as conflicts of interest. California courts consider a number of factors when determining whether a conflict of interest requires disqualification of attorneys, and many of those factors parallel the concerns enshrined by Clancy. For example, courts are to consider (1) a client’s right to choose counsel; (2) an attorney’s interest in representing a client; (3) the financial burden on a client to replace disqualified counsel, and (4) the possibility that tactical abuse underlies the disqualification motion.147
Although the Santa Clara appellate court raised the possibility that defendant’s motion for disqualification was intended “as a tactical device to delay litigation” and that it threatened to deprive the public entities of their choice of counsel,”148 it failed to weigh and consider the countervailing interest of “public trust” mandated by Supreme Court precedent. In particular, the California Supreme Court has recognized that “determining whether a conflict of interest requires disqualification involves more than just the interests of the parties.”149 In both Comden v. Superior Court of Los Angeles County, and People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., the court stated that disqualification ultimately involves balancing “the clients’ right to counsel of his choice and the need to maintain ethical standards of professional responsibility.”150 Moreover, between these two choices, the Court’s consistent policy has been that “[t]he paramount concern must be to preserve public trust in the scrupulous administration of Justice and the integrity of the bar.”151 As a result of this policy, the SpeeDee Oil court stated that when courts have to choose between these two competing interests, “[t]he important right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.”152
This policy choice plainly parallels the reasoning of Clancy. In Clancy, the Court also stressed the importance of public confidence and insisted that all persons “performing tasks on behalf of and in the name of the government” must adhere to the neutrality standard.153 The Santa Clara appellate court, however, did not consider these concerns when it created its “control” corollary.154 There was no discussion about balancing the public entities’ right to select counsel and the public’s need to maintain its “trust in the scrupulous administration of Justice and the integrity of the bar.”155 Instead, the appellate court concentrated its legal reasoning on the deployment of legal fictions.156
By basing their arguments on case-specific facts, by creating their own Clancy-related facts,157 and by failing to address the ethical underpinnings for Clancy’s holding, the Santa Clara appellate court divined an arguable difference between the two cases. To be fair, in her concurring opinion, Justice Bramattre-Manoukian recognized the need for prosecutorial neutrality in public nuisance actions, but she failed to heed Clancy’s admonition that the neutrality obligation follows the job performed by the attorneys,158 not the rights and obligations as set forth in the contingent fee agreement.159 Although she acknowledged the legitimacy of the trial court’s concerns about verifying neutrality, she assumed – without discussing the complications discussed here – that the trial court could evaluate whether the contingent fee attorneys overreach and are unfair at anytime during the litigation.160 Finally, although she noted that prosecutorial neutrality is a consequence of discretionary decisions, and that neutrality is adversely impacted when it “has been placed within the influence or control of an interested party,” she dismissed those concerns in favor of giving the public entities their choice of counsel.161 Similarly to the majority, therefore, the concurring justice in Santa Clara failed to heed the California Supreme Court’s mandate to yield to ethical considerations that affect the fundamental principles of our judicial process.”162 As a result, an entire line of California authority designed to protect public confidence over the narrow interests of litigants is imperiled.
If the appellate court’s decision and judicial reasoning in the Santa Clara and Priceline cases are left to stand, California’s citizens will be left with a mere “promise” of professionalism, as opposed to a prudent guarantee. In short, they will be forced to “trust” that contingent fee counsel will be adequately “controlled” without any opportunity to “verify” that their confidence is respected. Accountability for abuse is a poor substitute for prevention – yet hindsight remediation is the only remaining option if the primacy of prophylactic neutrality is eliminated.163 Gone will be the ethical principles that Clancy put on a pedestal for all to see, admire and to which all attorneys representing the government in public nuisance cases were required to adhere. Those principles, instead of applying to all, will only apply to in-house government counsel once the requisite boiler-plate contractual language is inserted in all future contingent fee agreements. In Clancy’s place will sit a “control” corollary that places form over substance, that is easily manipulated, and is almost impossible to verify.
The appellate court’s “control” corollary will not work to sustain and enhance the public’s trust and confidence. It will, however, give public entities a powerful sword to wield – and an absolute shield against preclude preventive oversight by the judiciary. The sword is the powerful and resourceful contingent attorney. The shield is the absolute protection of the attorney-client and work product privileges. Guarded by these privileges, public authorities can merely claim that they are supervising contingent fee counsel adequately and then preclude their claims from being verified.
It is inevitable that such an opaque system will be abused. Perhaps not by every public authority and perhaps not by every contingent fee counsel, but an unpoliced system will eventually be compromised – especially if the potential gains are large. When that happens, the public’s confidence in our judicial system will be the victim. Even with “supervising” government counsel, contingent fees present tremendous incentives for victory – incentives that compromise the neutrality essential to protecting the public interest. As the tobacco litigation has sadly shown, even the highest legal officers of a State, such as Texas, can be compromised in these situations,164 Given this glaring example, it is impossible for an unsupervised “controlling” government attorney to guarantee that contingent fee attorneys will be neutral. The importance of protecting the public’s trust in the judicial system, so eloquently voiced in Clancy, cannot be protected by an irrefutable presumption of ethical behavior – especially when prior abuses demonstrate that human nature, including that of public officials, cannot be uniformly trusted. Indeed, forcing the public to accept a supervisor’s “word” about compliance is the antithesis of the transparency required by the democratic process. Nothing less than a guarantee of integrity is required when the public’s essential confidence is at risk, and no guarantees are possible when public authorities have the right to resist verification. Indeed, assuring public confidence is so vital that the existence of any potential lapses compromises the proceedings.165 As the United States Supreme Court correctly noted:
A concern for actual prejudice in such circumstances misses the point, for what is at stake is the public perception of the integrity of our criminal justice system. “[J]ustice must satisfy the appearance of justice” [Offutt v. United States (1954), 348 U.S. 11, 14, 75 S.Ct. 11, 13, 99 L.Ed. 11], and a prosecutor with conflicting loyalties presents the appearance of precisely the opposite. Society’s interest in disinterested prosecution therefore would not be adequately protected by harmless-error analysis, for such analysis would not be sensitive to the fundamental nature of the error committed.166
While these sentiments were stated in the context of a criminal prosecution, their importance is no less real in public nuisance litigation where the state is actively exercising its police powers.167
Accordingly, since the influence of monetary incentives places the public’s confidence at risk, simply allowing government “apex” attorneys to serve as “neutral” watchdogs solves nothing. Indeed, it creates greater opportunities for abuse by opening doors for potential ethical compromises between the highly compensated contingency counsel and comparatively poorer public officials. The California Supreme Court has consistently recognized that the goal is not to manage or control the risk of losing the public’s trust in our judicial system. The goal is to preclude actions that place the public’s trust at risk.168 Once the public’s confidence is compromised, there is no clear remedy to restore it, nor are there any metrics to measure the injury or when, if ever, it is restored. Mere political accountability, or even potential criminal responsibility, is a poor substitute for the spotless record guaranteed by Clancy’s rule. Moreover, no compensatory remedy exists for adverse parties whose interests have been compromised by private counsel’s excessive zeal. Nothing, not even fee forfeiture, diminishes the burden of unjust recoveries improperly enhanced by visions of personal gain.
The purpose of Clancy was to guarantee neutrality by absolutely forbidding relationships that, from a layman’s perspective, have the potential to violate neutrality. Transforming that prohibition into an obligation owed only by governmental “apex” attorneys undermines that purpose. There is a vast gap between “prohibition,” which Clancy mandated as a public necessity, and the control corollary created by the appellate court. Plainly, permitting a previously prohibited relationship to exist by entrusting it to human “control” guarantees nothing – rather, it relies upon a mere “promise” that fallible humans will “do the best they can.”169 Such a promise rings hollow when compared to predictable principles that rule out any possibility of harm. Public confidence is precious and indispensable to our democratic society, and no court, much less the California Supreme Court, should provide any opportunities – whether real or potential – for that trust to be compromised.
1. See, e..g, "Remarks on Signing the Intermediate-Range Nuclear Forces Treaty" (Dec. 8, 1987).
2. One of the primary reasons for the failure of the recent United Nations Climate Change Conference in Copenhagen was the parties’ inability to agree on means to verify that the funds raised to mitigate climate change would be used responsibly. See Richard O. Faulk, Copenhagen’s Disappointing Denouement: Anatomy of a Failed Convocation, 30 Andrews Litig. Rept. 11 (2009), also available at http://works.bepress.com/richard_faulk/37/.
3. "In all his activities, [a government attorney’s] duties are conditioned by the fact that he ‘is the representative not of any ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer.'" People v. Superior Court (Greer), 561 P.2d 1164, 1171 (Cal. 1977) (quoting Berger v. United States, 295 U.S. 78, 88, 55 S.Ct. 629, 633, 79 L.Ed. 1314 (1935)) (criminal case) and other cases; People ex rel. Clancy v. Superior Court, 705 P.2d 347, 746 (Cal. 1985) (quoting Greer) (applying the same neutrality policy to public nuisance abatement cases brought in the name of the people).
4. Clancy, 705 P.2d at 351 (holding that “the neutrality so essential to [our system of justice] is violated” “[w]hen a government attorney has a personal interest in the litigation.” Clancy, 705 P.2d at 351. Thus, this court held that the neutrality requirement precludes the use of contingent fee arrangements in any civil action “that demands the representative of the government to be absolutely neutral.” Id. at 352. The California Supreme court has stated that:
The nature of the impartiality required of the public prosecutor follows from the prosecutor’s role as representative of the People as a body, rather than as individuals. “The prosecutor speaks not solely for the victim, or the police, or those who support them, but for all the People. That body of ‘The People’ includes the defendant and his family and those who care about him. It also includes the vast majority of citizens who know nothing about a particular case, but who give over to the prosecutor the authority to seek a just result in their name.”
People v. Eubanks, 927 P.2d 310 (1996) (citing Corrigan, On Prosecutorial Ethics 13 Hastings Const. L.Q. 537, 538-539 (1986)).
5. See Cal. Gov’t Code § 81001(b) (“Public officials, whether elected or appointed, should perform their duties in an impartial manner, free from bias caused by their own financial interests or the financial interests of persons who have supported them”).
6. Although outside counsel may be considered “independent contractors” for some purposes, that independence does not liberate them from their ethical responsibilities as representatives of the public interest. They remain subject “to the heightened ethical requirements of one who performs governmental functions” because they are helping the state exercise its powers. See Clancy, 705 P.2d at 351 (noting that a lawyer cannot escape his ethical duties merely by declaring he is not a public official).
7. See Model Code Of Prof’l Responsibility EC 7-13, 7-14, 8-8, 9-1 & 9-2 (1983) and ABA Committee on Prof. Ethics, opn. No. 192 (1939). “California … has not adopted separate Rules of Professional Conduct applicable to government lawyers, but it has addressed government law office conflict problems through judicial decisions.” San Francisco v. Cobra Solutions Inc., 135 P.3d 20, 29 (Cal. 2006).
8. Clancy, 705 P.2d at 353.
9.County of Santa Clara v. Atlantic Richfield Co., 161 Cal.App.4th 1140 (Cal. Ct. App. 2008).
10. Id. at 1149-55. Basically, the Santa Clara appellate court held that if a public entity contractually retained control over all decision-making, then Clancy’s obligation of neutrality was limited to the government official over the case and did not extend to the contingent fee attorneys because, as a matter of law, they are “mere assistants.” Id at 1155.
11. From a practical perspective, the Santa Clara appellate court’s control corollary is unworkable and unreasonable because it has no bounds, no checks and balances. How does the Santa Clara appellate court expect defendants and trial courts to monitor whether a governmental “apex” attorney is adequately fulfilling his supervisory role, or whether he is being unduly or improperly influenced by the “assisting” contingent fee counsel? What constitutes an adequate amount of control? What does it mean to merely assist? How is anyone to know when contingent fee counsel cross the line from merely assisting to representing the interests of the government? Who has the burden to ferret out the existence of improper influence? Short of egregious actions on the part of the contingent fee counsel, violations of the “control” corollary will be virtually impossible to detect.
12. People v McGuire, 45 Cal 56, 57-58 (Cal. 1872) (“Courts are not at liberty to set aside or disregard the decisions of this Court because it may seem to them that the decisions are unsound. Until reversed or modified by this Court, its decisions must be accepted by all inferior tribunals.”).
13. See Patterson v. McLean Credit Union, 491 U.S. 164, 172 (1989); People v. Partida, 122 P.3d 765 (Cal. 2005). The Ninth Circuit Court of Appeals stated that:
Stare decisis is the policy of the court to stand by precedent; the term is but an abbreviation of stare decisis et quieta non movere — “to stand by and adhere to decisions and not disturb what is settled.” Consider the word “decisis.” The word means, literally and legally, the decision. Nor is the doctrine stare dictis; it is not “to stand by or keep to what was said.” Nor is the doctrine stare rationibus decidendi — “to keep to the rationes decidendi of past cases.” Rather, under the doctrine of stare decisis a case is important only for what it decides — for the “what,” not for the “why,” and not for the “how.” Insofar as precedent is concerned, stare decisis is important only for the decision, for the detailed legal consequence following a detailed set of facts.
United States Internal Revenue Serv. v. Osborne (In re Osborne), 76 F.3d 306, 96-1 U.S. Tax Cas. (CCH) paragr. 50,185 (9th Cir. 1996).
14. Auto Equity Sales, Inc. v. Superior Court, 369 P.2d 937, 940 (1962) (noting that this “rule has particular application to the appellate departments of the superior court” and that “[i]t would create chaos in our legal system if these courts were not bound by higher court decisions”).
15. Moradi-Shalal v. Fireman’s Fund Ins. Cos., 758 P.2d 58, 62 (Cal. 1988).
16. Id. at 62-63 (citing 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 758, p. 726, and see cases cited). In his treatise, The Nature of the Judicial Process, Benjamin Cardozo stated:
It will not do to decide the same question one way between one set of litigants and the opposite way between another. “If a group of cases involves the same point, the parties expect the same decision. It would be a gross injustice to decide alternate cases on opposite principles. If a case was decided against me yesterday when I was a defendant, I shall look for the same judgment today if I am plaintiff. To decide differently would raise a feeling of resentment and wrong in my breast; it would be an infringement, material and moral, of my rights.” Adherence to precedent must then be the rule rather than the exception if litigants are to have faith in the even-handed administration of justice in the courts.
Benjamin N. Cardozo, The Nature of the Judicial Process 33-34 (New Haven and London: Yale University Press, 1921) (quoting in part W.G. Miller, The Data of Jurisprudence, at 335).
17. Moradi-Shalal, 758 P.2d at 62-63 (citing Cianci v. Superior Court, 710 P.2d 375 (1985) for the proposition that stare decisis “should not shield court-created error from correction”).
18. Golden Gateway Ctr. v. Golden Gateway Tenants Ass’n, 29 P.3d 797 (Cal. 2001).
19. Planned Parenthood v. Casey, 505 U.S 833, 868 (1992) (citing B. Cardozo, supra note at 149).
20. Id. (citing Powell, Stare Decisis and Judicial Restraint, 1991 Journal of Supreme Court History 13, 16).
23. “Much as we may deplore a rule of law … an intermediate appellate court must accept the settled law as it finds it.” Latham v. Santa Clara County Hospital, 231 P.2d 513, (Cal. Ct. App. 1951) (gudgeoning affirming a decision involving a rule the court “deplored”).
24. The authors do not contend that the judges in Santa Clara or any other case deliberately set out to circumvent Supreme Court precedent, or that that they engaged in any reasoning that was not pursued in good faith or conscience. Nothing in this article should be so construed. Instead, the authors simply maintain that the court fell unintentionally into error by failing to apply the appropriate weight to stare decisis. As the authors will show, this is a common error often found when a court determines to stress factual distinctions to reach a different result than a precedent appears to demand.
31. Clancy, 705 P.2d at 352-53 (footnote omitted); see also "Richard O. Faulk & John S. Gray, Alchemy in the Courtroom? The Transmutation of Public Nuisance Litigation, 2007 Mich. St. L. Rev. 941, 947-48 (2007)" Richard O. Faulk & John S. Gray, Alchemy in the Courtroom? The Transmutation of Public Nuisance Litigation, 2007 Mich. St. L. Rev. 941, 947-54 (2007) (discussing the development of public nuisance law)..
39.Even if the motives of private contingent fee counsel are purely altruistic, potentially gigantic contingent fees taint their hiring and raise immediate “appearances of impropriety.” See David E. Dahlquist, Inherent Conflict: A Case Against the Use of Contingency Fees by Special Assistants in Quasi-Governmental Prosecutorial Roles, 50 DePaul L. Rev. 743, 787 (2000) (citing Daniel J. Capa, The Tobacco Litigation and Attorney Fees, 67 Fordum L. Rev. 2827, 2848 (comments of Professor Brinkman) for the recognition that given the amounts of money at stake, it was inevitable that the selection of private practitioners to represent the state would be tainted by the volume of money at stake).
45. County of Santa Clara v. Atlantic Richfield Co., 137 Cal.App.4th 292 (Cal. Ct. App. 2006) (“Santa Clara I”); County of Santa Clara v. Atlantic Richfield Co., 161 Cal.App.4th 1140 (Cal. Ct. App. 2008) (“Santa Clara II”).
46. Santa Clara I, at 302. In 1955, the paint industry issued a voluntary standard that required paint sold for interior use contain less than 1% lead by weight in its dried film. American Standards Association, American Standards Specifications to Minimize Hazards to Children from Residual Surface Coating Materials (Z66.1-1955) (approved Feb. 16 1955). Deciding that this was not enough, Congress passed the Lead-Based Paint Poisoning Prevention Act (the “LPPPA”) in 1971. Pub. L. No. 91-695, 84 Stat. 2078 (1971) (codified at 42 U.S.C. §4801, et seq.). Through the LPPPA, Congress banned the use of lead-based paint in residential structures constructed or rehabilitated by the federal government. 42 U.S.C. §4831(b). In 1973, Congress amended the LPPPA to require, inter alia, the Secretary of HUD to “implement procedures to eliminate the hazards of lead-based paint poisoning in all federally owned properties prior to the sale of such properties when their use is intended for residential habitation.” Pub. L. No. 93-151, 87 Stat. 565 (1973); Thomas F. Zimmerman, The Regulation of Lead-Based Paint in Air Force Housing, 44 A.F.L. Rev. 169, 175 (1998) (describing in detail the LPPPA and its amendments). In 1978, Consumer Product Safety Commission restricted the sale of paint used for residential use. See 16 C.F.R. §1303.1.
47. Ten cities and counties are now prosecuting this lawsuit: the City and County of San Francisco; the counties of Santa Clara, Solano, Alameda, Monterey, San Mateo, and Los Angeles; and the cities of Oakland, San Diego, and Los Angeles. Santa Clara I, at 299; Santa Clara II, at 1145 n.1.
56. Id. at *2 (noting that some of the contingent fee agreement “clearly state outside counsel ‘is given absolute discretion in the decision of who to sue and who not to sue, if anyone, and what theories to plead and what evidence to present’ ” but acknowledging that plaintiffs were revising the contracts to uniformly state that “the government attorneys have retained decision-making authority and responsibility in the case, notwithstanding the hiring of outside counsel”).
59. Id. at *4 (noting that “[t]he standard of neutrality should apply, however, regardless of the wealth of either the government lawyer or the defendant” and that “[i]f Defendants are entitled to neutral prosecution by government attorneys who are not operating under a contingent fee arrangement, then they are so entitled throughout the prosecution of this case”); see also Clancy, 705 P.2d at 352-53 (disqualifying Mr. Clancy as counsel to the city because of the contingent fee contractual agreement but stating that the city could rehire Mr. Clancy in the same case, but presumably under a different type of fee agreement).
63. “We acknowledge, as we must, that we are bound to follow binding precedent of a higher court, and that refusal to do so is in excess of our jurisdiction.” Id. at 1151. (quoting Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450 [20 Cal. Rptr. 321, 369 P.2d 937]"Auto Equity Sales, Inc. v. Superior Court,; 369 P.2d at 939-40).
69. It is appropriate to note that the authors here use the term “legal fictions” in its jurisprudential sense, as is discussed infra, section IV, not to suggest any deliberate circumvention or dishonesty.
70. See supra note 50.
71. Santa Clara II, at 1152.
72. Id. at 1155.
73. See supra section II.2.
74. See supra note 63 and accompanying text.
75. In fact, in the last paragraph of her concurring opinion, Justice Bramattre-Manoukian “respectfully invite[s] the California Supreme Court to review this issue and to provide guidance to the courts and public entities.” Santa Clara II, at 1167.
76. See supra section III.2.
78. See, e.g., The State Lawsuit Racket, Wall St. J. (April 8, 2009)(discussing Janssen Pharmaceutica's challenge of the contingent fee contract given by Pennsylvania Governor Rendell to Houston-based plaintiffs firm Bailey Perrin Bailey to sue the company), available at http://online.wsj.com/article/SB123914567420098841.html; Faulk & Gray, supra note 31, at 969 n.141 (providing documented examples of political cronyism linked to the use of contingent fee agreement in the tobacco litigation); Cash In, Contracts Out: The Relationship Between State Attorneys General and the Plaintiffs’ Bar (U.S. Chamber Inst. Leg. Reform, 2004) available at www.instituteforlegalreform.org/get_ilr_doc.php?id=942.
79. See supra note 19 and accompanying text.
81. See Jeremiah Smith, Surviving Fictions, 27 Yale L. R. 147, 150 (1917) (quoting Oliver R. Mitchell, The Fiction of the Law: Have They Proved Useful or Detrimental to its Growth? 7 Harv. L. Rev. 249, 262 (1893)).
82. Mitchell, supra note 81, at 252 (quoting Best on Evid. and Presumption).
83. Id. at 253.
that judges, in general, do not frankly admit that the law is being changed by their decision, but that, on the contrary, judges frequently use fiction phrases to conceal the fact of such changes, making the fictitious assumption that no change has been made, by addition or in any other manner, in the law as formally laid down.Id.
Id. at 149 (arguing that “fiction is frequently resorted to in an attempt to conceal the fact that the law is undergoing alteration at the hands of the judges).
85. Id. at 154.
86. Id. at 152. “‘By covering the [judicial] innovation with a decent lie, he treated the abrogated law with all seemly respect, whilst he knocked it on the head.’” (Id. at 151 (quoting 2 Austin, Jurisp. (3d ed.) 630).
87. See supra note 66, and accompanying text (distinguishing Clancy by claiming that as the government’s arguing that as the government’s “sole representative in its public nuisance abatement action,” Mr. Clancy wrongly had “complete control over the litigation”).
88. In a tax collection case in which the plaintiffs challenged the use of contingent fee counsel to litigate collection disputes, a three-judge panel of the San Ana Court of Appeals questioned “the unstated assumption upon which Clancy is based” pronouncing that they “are troubled by the notion that lawyers are more apt to treat defendants unfairly if they are paid pursuant to a contingency fee agreement, rather than an hourly fee agreement.” Priceline.com Inc. v. City of Anaheim, __ P.2d __, 2010 WL 16022, *12 (Cal. App. 4th Dist., Jan. 5, 2020) (proclaiming that contingent fee attorneys should be “ ‘reward[ed] for thus acting in the interest of [Anaheim] and the people,’ ” citing Marshall v. Jerrico, Inc., 446 U.S. 238, 248-49 (1980) for the propositions that prosecutorial “need not be entirely ‘neutral and detached’ ” and state legislatures may stimulate prosecutions by rewarding citizens acting in the interest of the State and the people, ” but ignoring the Supreme Court’s admonition that there are limits on the partisanship of administrative prosecutors because they are “public officials “ and “they too must serve the public interest” not their own). Instead of simply noting that Clancy specifically stated that debt collection cases were a class of cases in which the governmental use of contingent fee agreement to hire outside counsel was allowed (Clancy, , 705 P.2d at 352, citing Denio v. City of Huntington Beach (1943) 22 Cal.2d 580. 140 P.2d 392), the San Diego appellate court went out of its way to make an argument that Clancy does not prohibit the governmental use of contingent fee attorneys in any case as long as they are “co-counsel.” Id. at *5-*7.
89. See generally Clancy, 705 P.2d 347 (Cal. 1985).
90. Id. at 353 n.4.
92. Id. at 350-51.
93. Id. at 350.
94. See Priceline.com Inc. at *1.
95. Clancy, 705 P.2d at 350-52 (citing People v. Superior Court (Greer), 561 P.2d 1164 (1977) (criminal); City of Los Angeles v. Decker, 558 P.2d 545 (1977) (eminent domain)).
96. Clancy, 705 P.2d at 351.
97. Id. at 352 (focusing on the nature of the case) (emphasis added).
98. Id. (citing Denio v. City of Huntington Beach 140 P.2d 392 (Cal. 1943)).
99. See Faulk & Gray, supra note 31, at 948-49 (citing William L. Prosser, Private Action for Public Nuisance, 52 Va. L. Rev. 997, 997 (1966)).
100. See Priceline.com Inc., 2010 WL 16022 at *7; supra note 72 and accompanying text.
102. Priceline.com Inc., 2010 WL 16022 at *7; Santa Clara II, at 1154-55.
103. See Priceline.com Inc., 2010 WL 16022 at *6 and Santa Clara II, at 1153-54 (both citing Clancy, 705 P.2d at 353 n.3, citing Sedelbauer v. State, 455 N.E.2d 1159, 1164 (Ind. App. 1983)). It also appears that the co-counsel was not compensated by the government for his services. Sedelbauer, 455 N.E.2d at 1164.
104. See Priceline.com Inc., 2010 WL 16022 at *7 n.7 (claiming that Clancy was “embracing the arrangement in Sedelbauer as a counterpoint to the arrangement in Clancy”).
105. All that is known about this “co-counsel” is that he worked for “Citizens for Decency through Law,” he was vehemently opposed to pornographic material, was appointed to assist in the trial of this criminal case, and was admitted pro has vice to serve as co-counsel. Sedelbauer, 455 N.E.2d at 1164. The Clancy court was not concerned about governmental use of outside counsel acting as lead or co-counsel – it was concerned about neutrality. Therefore, it forbade paying outside counsel in those classes of cases that require prosecutorial neutrality using contingent fee agreements. See infra section IV.2.b.
105. All that is known about this “co-counsel” is that he worked for “Citizens for Decency through Law,” he was vehemently opposed to pornographic material, was appointed to assist in the trial of this criminal case, and was admitted pro has vice to serve as co-counsel. Sedelbauer, 455 N.E.2d at 1164. The Clancy court was not concerned about governmental use of outside counsel acting as lead or co-counsel – it was concerned about neutrality. Therefore, it forbade paying outside counsel in those classes of cases that require prosecutorial neutrality using contingent fee agreements. See infra section IV.2.b.
106. See supra note 95.
107. Clancy, 705 P.2d at 352
108. As an aside, if these contingent fee attorneys’ efforts on behalf of the governmental entities are as limited and unimportant as the Santa Clara appellate court portrays them to be, it is intuitively obvious that the governmental entities would never have agreed to give them a 17% contingent fee. See Clancy, 705 P.2d at 350 (highlighting the problematic contingent fee terms in Mr. Clancy’s contingent fee agreement).
109. Id. at 352-53. The Clancy court stated that the duty of neutrality is born of two fundamental aspects of the attorney’s employment: “First, he is a representative of the sovereign; he must act with the impartiality required of those who govern. Second, he has the vast power of the government available to him; he must refrain from abusing that power by failing to act evenhandedly.” Id. at 350.
110. Id. at 351 (noting that a lawyer cannot escape his ethical duties merely by declaring he is not a public official).
111. See Order at *3; see also supra note 57, and accompanying text.
112. See Clancy, 705 P.2d at 351.
113. Santa Clara II, at 1149-50.
114. Id. at 1151-52.
115. The Clancy court unequivocally held that public nuisance abatement cases are in a class of cases (along with “eminent domain and criminal cases”) brought “in the name of the people” by public officials that can trigger a criminal prosecution that “demands the representative of the government to be absolutely neutral.” See Clancy, 705 P.2d at 352-53.
116. It is hard to believe that any court in the California judiciary would allow anyone associated with prosecuting a criminal case, at any level, to be paid on a contingent fee basis. If as the Clancy court has held that public nuisance cases brought in the name of the people are in the same class as criminal cases, then all contingent fee agreements in those cases should likewise be forbidden.
119. Id. at 351-53 (discussing prosecutorial neutrality in criminal cases and extending that obligation to “public nuisance abatement actions”).
120. Id. at 351-52; Bruce A. Green and Fred C. Zacharias, Prosecutorial Neutrality, 2004 Wisc. L. Rev. 837, 847-49 (2004) (discussing attributes of prosecutorial neutrality).
121. See Green and Zacharias, supra note 120, at 840.
122. Marshall v. Jerrico, Inc., 446 U.S. 238, 249, 100 S.Ct. 1610, 1617, 64 L.Ed.2d 182 (1980) (stating that a “scheme injecting a personal interest, financial or otherwise, into the enforcement process may bring irrelevant or impermissible factors into the prosecutorial decision and in some contexts raise serious constitutional questions”).
123. See People v. Eubanks, 927 P.2d 310 (1996) (noting that the prosecutor had a potential conflict because the “institutional arrangements link [his office] too closely to a private party ... who in turn has a personal interest in the defendant's prosecution and conviction”).
124. Id. at 312 (noting that the bias might “render it unlikely that defendant will receive fair treatment during all portions of the criminal proceeding").
125. Id. at 320.
126. Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 950 P.2d 1086, 1113 (Cal. 1998) (J. Brown dissenting citing Clancy 705 P.2d at 353 [prosecutor's contingent fee arrangement required disqualification; his direct, personal interest was “antithetical to the [prosecutor's] standard of neutrality”]) (emphasis in original).
127. Using an old west analogy, the Santa Clara appellate court’s control corollary requires the town Sherriff to be neutral, to treat the people he is chasing even handedly, to make sure that a full and fair record is developed and that the people he is chasing are treated fairly. It also allows the Sherriff to hire and deputize a posse of hard-working, smart, money-motivated attorneys to be his “assistants” and allows him to pay them only if he successfully extracts money from the people he is chasing. If the Sherriff does not recover any money, his posse does not get paid. The appellate court’s control corollary also exempts the Sherriff’s posse from all the obligations expected of the Sherriff. When the Sherriff is not looking, they are legally allowed to rough-up the people being chased, to develop only that evidence that helps them get paid and not care whether the people they are chasing are treated fairly. Of course, the town Sherriff honestly believes that neither he, nor his money-motivated posse, would ever operate in a manner unfair to the people he is chasing. But he is unwilling to let outsiders look too deeply into the influence his posse is exerting to see if abuses are occurring. To stop the prying eyes of public oversight, the Sherriff invokes the attorney-client and work product privileges. When people complain about the Wizard of Oz-like curtain shrouding the Sheriff’s litigation, the Sherriff responds by saying that the public, like the courts, should assume that he and is his posse are fairly treating the people they are chasing. When the public is unsatisfied with his “trust me” response, the Sherriff defensively claims that if anyone can prove his posse is inappropriately influencing his decisions or how he is prosecuting the case, he is sure that they will inform the trial judge.
128. Cobra Solutions Inc., 135 P.3d at 24. “The paramount concern must be to preserve public trust in the scrupulous administration of Justice and the integrity of the bar. The important right to counsel of one's choice must yield to ethical considerations that affect the fundamental principles of our judicial process.” People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., 980 P.2d 371, 378 (1999) (citing Comden v. Superior Court, 576 P.2d 971, 975 (Cal. 1978); In re Complex Asbestos Litigation, (1991) 232 Cal.App.3d 572, 586; River West, Inc. v. Nickel, 188 Cal.App.3d 1297, 1306-1308; see 1 Hazard & Hodes, The Law of Lawyering, § 1.7:101, pp. 223-225 (2d ed. 1996 & 1998 supp.) [discussing the assumed function of automatic disqualification rules in maintaining public confidence in the legal system]).
129. Santa Clara II, at 1152.
130. Id. at 1149-50.
131. The Santa Clara appellate court’s claim that it is undisputed that contingent fee counsel “merely assist” in-house government attorneys is itself a legal fiction used to minimize discussion about scope and nature of the role these contingent fee attorneys had in this litigation. Id. at 1152 n.10 (“This case is not an appropriate vehicle for us to opine on the precise nature of the decision that a superior court would be required to make in a case in which there were factual disputes regarding the nature of the fee agreement or the relationship between private counsel and a public entity.”). The concurring opinion recognized this legal fiction when it stated that courts needed a “factual determination made on a case-by-case basis” to determine whether the use of contingent fee agreement violated Clancy’s neutrality obligation. Id .at 1156. The proof of this legal fiction is found in the case pleadings where the defendants took the position that the contingent fee “[a]ttorneys [were] retained not merely to perform ministerial functions, but to advise on strategy and tactics.” See Return by Real Parties in Interest to Petition for Writ of Mandate, Prohibition, Certiorari or other Alternative Relief, 40 (Cal. Ct. App. 6 Dist. filed July 30, 2007) (No. H031540) (claiming that the public entities admitted hiring these contingent fee lawyer for their expertise in public nuisance litigation).
132. See Clancy, 705 P.2d at 747-48 (discussing the effect of Mr. Clancy’s personal interest in the outcome of litigation on his neutrality).
133. See State v. Lead Indus. Assoc., Inc., 951 A.2d 428, 433 (R.I. 2008) (identifying contingent fee attorneys John McConnell and Fidelma Fitzpatrick of the Motley Rice law firm as representing the State); In re: Lead Paint Litigation, 924 A.2d 484, 494 (N.J. 2007) (identifying Fidelma Fitzpatrick of the Motley Rice law firm as arguing the cause for the counties); see also Faulk & Gray, supra note 31, at 995-1001 (discussing the key role of the Motley Rice attorneys in the Rhode Island litigation).
134. See Santa Clara II, at 1143 (identifying Fidelma Fitzpatrick of the Motley Rice law firm as counsel for the counties).
135. See Order, infra note 55 at *4; Petition for Writ of Mandate, Prohibition, Certiorari or other Appropriate Relief 7, 20, 22 (Cal. Ct. App. 6 Dist. filed May 9, 2007) (No. H031540) (stating reasons for hiring contingent fee counsel in Chronology of Events and Memorandum of Points and Authorities); see also Petitioner’s Response to Amicus Curiae Brief of the American Chemistry Counsel 9-12 (Cal. Ct. App. 6 Dist. filed Sept. 25, 2007) (No. H031540) (arguing that State’s competitive bidding process does not apply to attorneys hired to perform “special services” based on their unique skills or abilities).
136. Santa Clara II, at 1145. The governmental entities’ contingent fee lawyers are highly respected and influential lawyers and strategists, none of whom should ever be labeled as a “mere assistant.” See Motley Rice Attorney Bio for Ronald L. Motley (2009), available at http://www.motleyrice.com/attorneys/displayattorneyprofile.asp?aid=104 (describing Mr. Motley as “[o]ne of the most influential lawyers in America,” who is highly skilled, very persuasive before a jury and known for his ability to break new legal and evidentiary ground); see also Cotchett, Pitre & McCarthy Attorney Bio for Mr. Joseph W. Cotchett (2009), available at http://www.cpmlegal.com/lawyerprofile.php?n=cotchett (describing Mr. Joseph W. Cotchett as one of the foremost and influential trial lawyers in the country during the past 10 years, and as one of the best trial strategists in California); Mary Alexander & Associates Attorney Bio for Mary Alexander (2009), available at http://www.maryalexanderlaw.com/attorneys.html (quoting the California Daily Journal for describing Mary Alexander as one of the 100 Most Influential Attorneys in California).
137. Santa Clara II, at 1152 n.10.
138. As Jeremiah Smith warned, a legal fiction is any “assumption that conceals, or effects to conceal, the fact that a rule of law has undergone alteration, its letter remaining unchanged, its operation being modified.” See supra note 81 and accompanying text.
139. See Clancy, 705 P.2d at 746 (emphasis added).
140. Id. (citing Model Code of Prof’l Resp. EC 7-14 (1983)).
141. Id. at 351; see also supra note 41, and accompanying text.
142. Clancy, 705 P.2d at 351 (emphasis added).
143. Santa Clara II, at 1151-52 (stating that without total authority, private counsel “are not themselves acting ‘in the name of the government’ and have no role in the ‘balancing of interests’ that trigger the absolute neutrality requirement” (emphasis in original)).
144. Clancy, 705 P.2d at 350.
145. People v. Vasquez, 137 P.3d 199, 216 (2006) (citing Eubanks, 927 P.2d 310 which was quoting People v. Superior Court (Greer), 561 P.2d 1164(1977)).
146. See John Moritz, Morales Gets 4 Years in Prison, Fort Worth Star Telegram, Nov. 1, 2003, at 1A (reporting on Texas Attorney General Morales’ conviction for attempts to secure millions of dollars in contingent fees to a private tobacco lawyer); Editorial, All Aboard the Gravy Train, St. Louis Post-Dispatch, Sept. 17, 2000, at B2; Assoc. Press., Lawyer Fees Weren’t S.C.’s, Official Says, Charlotte Observer, May 2, 2000, at 1Y. See also, supra note 78.
147. SpeeDee Oil Change Systems, 980 P.2d at 377-78 (citing In re Complex Asbestos Litigation, 232 Cal.App.3d at 586; River West, 188 Cal.App.3d 1308-1309; see generally 1 Hazard & Hodes, The Law of Lawyering, at § 1.10:103, pp. 320-322 [discussing interests involved in vicarious disqualification]).
148. Santa Clara II, at 1147 (discussing why appellate review of the trial court’s order was appropriate and noting that “any error in the order would result in unjustifiably depriving the public entities of their right to counsel of choice”). The idea that the public entities would be denied their “choice of counsel” is somewhat belied by their failure to pursue alternatives to contingent fee agreements. Indeed, if they truly lack the “political capital” to raise the funds necessary to protect their citizenry, one wonders why the judiciary should sidestep Clancy’s ethical obligations to supply resources for a cause their ultimate client – the voters – are unwilling to support. Obviously, the public entities are more interested in shifting the present risk of speculative litigation to their outside counsel than they are in conserving a possible recovery for the benefit of their constituents. The false public expectation of a “free ride” promised by “risk free” contingent fee agreements is itself a reason to invoke Clancy’s protection – especially since voters are utterly disenfranchised from approving the fee’s ultimate amount and distribution. Under Clancy’s standards, such a “backdoor” allocation of funds “may lead the layman to conclude that the attorney is utilizing his public position to further his professional success or personal interests.” Clancy, 705 P.2d at 350-351.
149. SpeeDee Oil Change Systems, 980 P.2d at 378.
150. Comden v. Superior Court of Los Angeles County, 576 P.2d 971, 975 (Cal. 1978); SpeeDee Oil Change Systems, 980 P.2d at 378 (citing Comden v. Superior Court, 576 P.2d at 915).
151. SpeeDee Oil Change Systems, 980 P.2d at 378.
152. Id. (citations omitted).
153. Clancy, 705 P.2d at 351
154. See generally Santa Clara II (not once in the Santa Clara appellate court’s opinion is the ABA Code of Professional Responsibility mentioned).
155. See supra note 151
156. See supra section IV.
157. See supra note 66.
158. See supra note 32.
159. Santa Clara II, at 1164 (stating that”[i]t is therefore reasonable to assume at this point in the litigation that the government attorneys intend to retain control over all discretionary decision making”).
160. Id. at 1166.
161. Id. (citation omitted).
162. Id. (citations omitted).
163. See Arizona v. Roberson, 486 U.S. 675, 681-82 (1988) (discussing the value of bright-line rules).
164. See supra note 146.
165. See Young v. United States ex rel. Vuitton (1987), 481 U.S. 787, 812-13 (noting that once a conflict is found, the entire prosecution must be recused because in a case there are “a myriad of occasions for the exercise of discretion, each of which goes to shape the record in a case, but few of which are part of the record”).
166. Vuitton, 481 U.S. at 811-12 (noting that the misuse of governmental powers unfairly harasses citizens, gives unfair advantage to the prosecutor’s personal interests, and impairs public willingness to accept the legitimate use of those powers).
167. See Santa Clara II, at 1161 (acknowledging that “a government lawyer in a civil action” must seek “impartial justice”).
168. Cobra Solutions, 135 P.3d at 28 (“Attorneys who head public law offices shoulder additional ethical obligations assumed when they become public servants. They possess ‘such broad discretion’ that the public ‘may justifiably demand’ that they exercise their duties consistent ‘with the highest degree of integrity and impartiality, and with the appearance thereof.’” Id. (citing People v. Superior Court (Greer) 561 P.2d 1164, 1172 (1977) [disqualification of conflicted district attorney])).
169. The Santa Clara appellate court’s control corollary inappropriately requires the public to “trust” that government’s obligation to govern fairly and to seek justice for all will not be adversely influenced or impacted by its choice to hire financially-biased contingent fee counsel. It requires the public to trust:
• that these highly influential and skilled contingent fee attorneys (who are “mere assistants”) will never influence or tilt the requisite “balancing of interests” as a result of their decisions, their control over aspects of the litigation, or by their advice and counsel;
• that these financially motivated contingent fee attorneys will never inappropriately use their influence and skills to alter the course of litigation to their benefit; that they will develop a full and fair record and are capable of treating defendants evenhandedly and fairly;
• that governmental “apex” attorneys will not be inappropriately influenced by financially motivated contingent fee attorneys’ advice and recommendations;
• that governmental “apex” attorneys will never authorize their contingent fee counsel to assist them to control any aspect of the litigation; that they will make all litigation decisions (not just the most significant decisions) and will never merely rubberstamp their contingent fee counsel’s expert recommendations; and
• that governmental “apex” attorneys can successfully manage and control their independent and influential contingent fee counsel even when that requires them to implement a strategy that, in the interest of justice, could reduce or negate the contingent fee.